Risk Management
Tutorial 7
2) What is strategy risk? What is the taxonomy of strategy risk?
Strategy risk is a possible source of loss that might arise from the pursuit of an unsuccessful business plan. For example, strategy risk might arise from making poor business decisions, from the substandard execution of decisions, from inadequate resource allocation, or from a failure to respond well to changes in the business environment.
The taxonomies of strategy risk are objectives, business plan, new business development, resources, stakeholder interests, corporate experience and reputation.
Objectives are the basis for work and the assignment of work. It must be clearly stated and understood for a strategy to succeed.
Business plan is intended to be a communication tool. The plan’s ability to communicate the business strategy upon which it is based will determine the success of strategy.
New business development is risks associated with plans for entering new business areas, expansion through mergers and acquisitions, providing new services and enhancing infrastructure.
Resources is a risk category relate to a lack of comprehension of resource needs to meet objectives, a mismatch between objectives and existing resources, and technical ability of staff.
Stakeholders are likely to have conflict of interests, so their requirement should be reflected in the business plan. If omitted, they could be the source of problems in the long term.
A business’s corporate experience will reflect on the risk exposure profile of the business’s strategy. Issues reflecting corporate experience include knowledge of markets, customers, suppliers and the regulatory constraints of the industry.
Reputation can present a serious risk to a business. A poor reputation can impede the sale of goods or services, deter desirable business partners and make debt more expensive to obtain.
Question 1
Describe what are the FOUR (4) Financial Risk and FOUR (4) Operational Risk to business.
-There is
2) What is strategy risk? What is the taxonomy of strategy risk?
Strategy risk is a possible source of loss that might arise from the pursuit of an unsuccessful business plan. For example, strategy risk might arise from making poor business decisions, from the substandard execution of decisions, from inadequate resource allocation, or from a failure to respond well to changes in the business environment.
The taxonomies of strategy risk are objectives, business plan, new business development, resources, stakeholder interests, corporate experience and reputation.
Objectives are the basis for work and the assignment of work. It must be clearly stated and understood for a strategy to succeed.
Business plan is intended to be a communication tool. The plan’s ability to communicate the business strategy upon which it is based will determine the success of strategy.
New business development is risks associated with plans for entering new business areas, expansion through mergers and acquisitions, providing new services and enhancing infrastructure.
Resources is a risk category relate to a lack of comprehension of resource needs to meet objectives, a mismatch between objectives and existing resources, and technical ability of staff.
Stakeholders are likely to have conflict of interests, so their requirement should be reflected in the business plan. If omitted, they could be the source of problems in the long term.
A business’s corporate experience will reflect on the risk exposure profile of the business’s strategy. Issues reflecting corporate experience include knowledge of markets, customers, suppliers and the regulatory constraints of the industry.
Reputation can present a serious risk to a business. A poor reputation can impede the sale of goods or services, deter desirable business partners and make debt more expensive to obtain.
Question 1
Describe what are the FOUR (4) Financial Risk and FOUR (4) Operational Risk to business.
-There is